Thursday, March 10, 2011

PEU's Splatter Forbes Billionaire List

Forbes Billionaire list showed over 200 new billionaires on the world stage.  SkyNews reported:

Despite the global economic downturn, the Forbes 25th list of the richest people on the planet saw the number of billionaires increase by 214 to a record 1,210.
A number of private equity underwriters (PEU's) made the list

#169 Stephen Schwarzman- $5.9 billion, up $1.2 billion
#281 Henry Kravis-$3.9 billion, down $300 million
#310 Leon Black- $3.5 billion, up $1 billion
#347 Ron Burkle- $3.2 billion, no change from 2010

The Carlyle Group's DBD (David, Bill and Danny) showed little change, despite their "Great Cash-in" in 2010 and early 2011:

#440 David Rubenstein- $2.6 billion, an increase of $100 million
#540 William Conway- $2.2 billion, a decline of $300 million
#540 Daniel D'Aniello- $2.2 billion, a decline of $300 million

Carlyle's founders have a number of DBD named corporations, including two in the Cayman Islands.  How did DBD investments fare this last year?

DBD Investors V, LLC benefited from two IPOs, Booz Allen Hamilton and Coresite Realty, as well as the sale of Vought Aircraft Industries to Triumph Group.  Their latest filing shows investments valued at $378 million, up from $9.3 million the prior year

DBD Cayman Holdings, Ltd has $515 million in holdings as of early 2011. It is this funds first filing

DBD Cayman, Ltd had held investments worth $406 million in late 2010.  The Cayman fund has $48 million in Boston Private stock, a TARP beneficiary.  It benefited from IPO's for BankUnited and Nielsen Holdings N.V.  DBD Cayman took a stake in Central Pacific Bank, as well as Hampton Roads Bankshares .  In late 2009 DBD Cayman had holdings of $154 million

The two DBD funds rose over $600 million in the last year.  Throw in the new Cayman fund and the increase exceeds $1.1 billion.  This is not reflected in the Forbes numbers.

The four IPOs are a fraction of Carlyle's "Great Cash-In,"  where they sold or took public dozens of firms. One thing could've impacted Carlyle's returns, taxing carried interest as income. 

With the Senate considering eliminating PEU's preferred taxation, robber barons descended on the Capital.  David Rubenstein personally visited with Senators to keep Carlyle's money train chugging.   Tax hating William Conway's ensured his voice was heard.  Carlyle associate political contributions during this tense time included:

William E. Conway, Jr.  5/10/2010  $4,800   Chuck Schumer for U.S. Senate
Peter Clare 5/20/2010   $2,400  Kent Conrad
William E. Conway, Jr. 5/20/2010  $4,800   Kent Conrad
Allan Holt  5/20/2010   $4,800   Kent Conrad
Brooke Coburn  6/9/2010   $1,000  Charles Schumer
David Marchik  6/9/2010   $1,000   Charles Schumer
Oliver Sarkozy   6/9/2010  $1,000  Charles Schumer
Ray Whiteman   6/24/2010  $2,400  Kent Conrad
David Marchik  6/24/2010   $2,400  Kent Conrad

Contributions to Senators Conrad and Schumer paid off in late June, when Congress saved PEU carried interest taxation. How much did $25,000 in timely political donations pay off for Carlyle?  I expect the multiple was huge.

David, Bill and Danny had billions flow through their hands last year.  It's odd that Forbes found little of landing in their pockets.  We know some is funneled through the Walker House, 87 Mary Street, George Town in Grand Cayman.

George, Walker...   Bush paved the way for PEU success.  It continues unchecked under Obama with billionaires up 21%.

Update 3-13-11:  Carlyle Group's General Partnership received $500 million from Mubadala Development Company, which already held 7.5% of the the PEU. The $500 million bought convertible notes and additional equity.  This December 2010 deal had to add to the DBD's significant wealth.